Crypto is losing its momentum-trade status as investors turn toward AI stocks, according to Bitwise chief investment officer Matt Hougan.
- Bitwise says crypto is shifting from momentum trading to contrarian investing as AI stocks dominate flows.
- Matt Hougan says investors still believe in crypto but now favor fundamentals over market hype.
- Bitcoin remains pressured by ETF outflows, equity rotation and weak market sentiment.
Hougan said the crypto market is under pressure because investors now have several fast-moving alternatives. In a June 2 market note, he pointed to AI stocks, robotics firms and SpaceX as assets drawing market attention away from digital assets.
“The crypto market is brutal right now,” Hougan wrote. He added that crypto is moving “from momentum trade to contrarian bet” as AI takes more investor attention.
The shift comes after AI-linked stocks gained strong demand following the public launch of ChatGPT in late 2022. Nvidia, a key AI chipmaker, has seen its shares rise sharply since then, making AI one of the main stories in public markets.
Hougan said this change does not mean crypto is disappearing. Instead, he said it changes the type of investor and project that the market rewards.
Fundamentals Replace Market Hype
Hougan said contrarian bets need patience and a focus on fundamentals. He said investors who still believe in crypto now look for clear revenue, strong use cases and projects with working business models.
“Investors still believe in crypto, but now that it’s a contrarian bet, they favor fundamentals over vibes,” Hougan wrote.
He said this explains why some smaller tokens have performed better than major assets. Hyperliquid, BNB, Zcash and Stellar posted gains in May, while Bitcoin, Ethereum and Solana remained under pressure.
According to Hougan, that rotation shows that the market is no longer rewarding broad crypto exposure in the same way. It is now rewarding assets with clearer stories and stronger data.
Bitcoin weakness reflects broader market rotation
As previously reported by crypto.news, Binance Research also linked Bitcoin’s recent weakness to capital moving into U.S. equities. The firm said AI, defense and energy stocks have pulled flows away from Bitcoin during the current quarter.
Bitcoin also fell below $70,000 after U.S. spot Bitcoin ETFs recorded $483 million in daily net outflows. Those withdrawals extended an 11-session outflow streak that topped $3.4 billion.
Crypto.news also reported that Mt. Gox-linked wallets moved 10,306 BTC worth about $739 million. No direct sale was confirmed, but the transfer added new concern about possible supply entering the market.
The market remains weak, but Hougan said green pockets in smaller assets may show that crypto is closer to the end of the downturn than the start. He said the next phase will likely depend on fundamentals, regulation and whether investors return after the AI trade cools.
